JUDICIAL REVIEW and MONEY BILLS Pratik Datta, Shefali Malhotra & Shivangi Tyagi
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NUJS LAW REVIEW 10 NUJS L. REV (2017) JUDICIAL REVIEW AND MONEY BILLS Pratik Datta, Shefali Malhotra & Shivangi Tyagi Under the existing constitutional scheme in India, for a bill to be enacted into a law, it has to be approved by both Houses of the Parliament – the Lower House (Lok Sabha) and the Upper House (Rajya Sabha). However, one significant exception to this general rule is the certification of a bill as a 'money bill' by the Speaker of the Lower House, whereupon the bill can be enacted into a law by the Lower House alone, without any approval from the Upper House. Although the scope of a 'money bill' is broadly delineated in the Constitution, it is possible that a bill could be incorrectly certified as a ‘money bill’ by the Speaker and enacted into a law without the approval of the Upper House. Further, the Constitution accords finality to the decision of the Speaker as to whether the bill is a 'money bill', thus raising issues such as whether such finality would bar the Supreme Court from reviewing the accuracy of the Speaker's decision in this regard; and whether the Supreme Court can strike down such a law as being unconstitutional, if the Speaker's decision is indeed found to be incorrect. In this paper, we examine these questions which are of immense contemporary relevance in India, and attempt to posit our conclusions to the same. Table of Contents• I. INTRODUCTION ........................................................................................................................... 2 II. THE NEED FOR FINALITY: A HISTORICAL PERSPECTIVE .................................................... 5 A. The Original Sin ......................................................................................................................... 5 B. PARLIAMENT ACT, 1911 ......................................................................................................... 7 1. Rejection of the People’s Budget ............................................................................................ 7 2. Passage of the Parliament Act, 1911 ...................................................................................... 8 3. Provisions of the Parliament Act, 1911 .................................................................................. 9 III. CONTRADICTORY JURISPRUDENCE UNDER CONSTITUTIONOF INDIA ..................... 11 A. Drafting of the Constitution of India ....................................................................................... 11 B. Textual reading of the Constitution of India, 1949 .................................................................. 13 1. Conclusiveness of Speaker’s certificate ................................................................................ 14 1. Exclusion of judicial review of legislative proceedings ........................................................ 16 2. Requirements as to recommendations and previous sanctions ............................................. 16 National Institute of Public Finance and Policy, New Delhi. The authors would like to thank K.P. Krishnan, Ila Patnaik, Somasekhar Sundaresan, A.K. Jayasankaran Nambiar, Ajay Shah, Alok Prasanna Kumar, Anirudh Burman and Shekhar Hari Kumar for helpful discussions and suggestions on improving the paper. An earlier version of this paper was presented at the Law Economics Policy Conference 2016 in New Delhi. Various inputs received from the audience during the Conference materially helped in improving the paper. All errors, however, solely remain ours. We may be contacted at [email protected], [email protected] and [email protected] respectively. The article may be cited as “Pratik Datta, Shefali Malhotra & Shivangi Tyagi, Judicial Review and Money Bills, 10 NUJS L. REV. (2017) (Working Citation)”. • At the request of the author, we have added a Table of Contents, due to the length of the paper. NUJS LAW REVIEW 10 NUJS L. REV (2017) C. Supreme Court on ‘procedural irregularity’ and “procedural illegality” .............................. 18 D. Supreme Court on judicial review of ‘final’ decisions ............................................................ 20 E. Supreme Court on judicial review of Speaker’s certificate ..................................................... 25 IV. JUDICIAL REVIEW IN OTHER JURISDICTIONS ................................................................ 28 A. AUSTRALIA ............................................................................................................................. 29 B. CANADA .................................................................................................................................. 30 C. SOUTH AFRICA ...................................................................................................................... 31 D. UNITED STATES OF AMERICA ............................................................................................ 32 E. PAKISTAN ............................................................................................................................... 34 V. CONCLUSION ............................................................................................................................. 35 I.INTRODUCTION Under the extant constitutional scheme in India, for a bill to be enacted into a law, it has to be approved by both Houses of the Parliament – the Lower House (Lok Sabha) and the Upper House (Rajya Sabha). There is one exception to this general rule. A bill certified as a ‘money bill’ by the Speaker of the Lower House can be enacted into a law by the Lower House alone, without any approval from the Upper House. The scope of what could constitute a ‘money bill’ is defined in the Constitution of India. Yet, it is possible that a bill which does not fall within the scope of this definition could be incorrectly certified as a ‘money bill’ by the Speaker and enacted into a law without the approval of the Upper House. The Constitution of India categorically states that “if any question arises whether a Bill is a ‘money bill’ or not, the decision of the Speaker of the House of the People thereon shall be final." Does this provision imply that the Indian Supreme Court cannot review whether the Speaker’s certification of a bill as a ‘money bill’ is correct? And if it is actually incorrect, can the Supreme Court not strike down such a law for being unconstitutional? We attempt to examine these questions, which are of immense contemporary relevance in India, through the analysis undertaken in this paper. The rampant use of money bills in legislation-making in India came to the forefront during the enactment of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (‘Aadhaar Act, 2016’).1 The Bill was certified as a ‘money bill’ by the Speaker amid stiff resistance by the opposition.2 Ultimately, the Lower 1 See Pratik Datta, Shivangi Tyagi & Shefali Malhotra, The controversy about Aadhaar as a money bill, March 20, 2016, available at https://ajayshahblog.blogspot.in/2016/03/the-controversy-about-aadhaar-as-money.html (Last visited on March 20, 2016) (Here, we have explained why most of the provisions of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (‘Aadhaar Act, 2016’) could come within the scope of Art. 110(1)(g) of the Constitution. The only provision of the law which could cause concern is §33(2), which allows disclosure of information in the interest of national security). 2 Various commentators criticised the use of the money bill route to enact the Aadhaar Act, 2016. See The Indian Express, Name of the bill, April 15, 2016, available at http://indianexpress.com/article/ opinion/columns/aadhaar-bill-money-bill-name-of-the-bill-2754080/ (Last visited on September 21, 2016);See also The Indian Express, Privacy after Aadhaar, March 26, 2016, available at http://indianexpress.com/article/opinion/columns/privacy-after-aadhaar-money-bill-rajya-sabha-upa/ (Last visited on September 21, 2016); The Indian Express, Show me the money, March 12, 2016, available at http://indianexpress.com/Art./opinion/columns/show-me-the-money-4/ (Last visited on September 21, 2016). NUJS LAW REVIEW 10 NUJS L. REV (2017) House rejected the amendments suggested by the Upper House and unilaterally enacted the Aadhaar Act, 2016. Immediately after its enactment, a writ petition was filed by Mr. Jairam Ramesh – a senior Congress leader – in the Supreme Court, challenging the Speaker’s decision to treat the Aadhaar Bill as a ‘money bill’.3 The usage of the ‘money bill’ route to enact the Aadhaar Act, 2016, was not a solitary exception. In the last few years, key legislative reforms have been enacted as money bills. For instance, the Specified Bank Notes (Cessation of Liabilities) Bill, 2017, which was passed by the Lower House to fully implement the recent demonetisation scheme, was certified as a ‘money bill’ by the Speaker.4 Moreover, the Finance Act, 2017, which was enacted as a money bill, amended various statutes such as the Payments and Settlements Act, 2007, to create a Payments Regulatory Board within the Reserve Bank of India ('RBI');5 the Reserve Bank of India Act, 1934, to allow issuance of electoral bonds by any scheduled bank;6 and the Securities and Exchange Board of India Act, 1992, to change the composition of the Securities Appellate Tribunal.7 Similarly, the Finance Act, 2016, amended the Reserve Bank of India Act, 1934 to institutionalise the flexible inflation targeting monetary